Homes in the sun
JOHN BULL
There are really only two ways to stay in your own home when you go abroad. One is to load it all on to the luggage rack of the car. The other is to have a spare one waiting for you when you arrive. The num- ber of people who prefer to eschew the niceties of a hotel for the comforts of 'Chez Nous' in foreign climes, by buying their own holiday homes,. is growing rapidly. One company in-London selling real estate plots in the Bahamas sold twenty-eight last December alone, and all of these were for holiday villas. 'Our clientele don't emigrate, they can afford two homes', the managing director explained.
Nevertheless, the second home has be- come much more than a status symbol, and with care it can prove to be quite a useful investment. Apart from giving the owner a relatively cheap holiday for himself and his family, it can be made to pay for itself by judicious letting to other people. And England is not the only place in the world where the price of property appreciates with satisfying regularity.
Naturally enough, the sterling area coun- tries have in the past been the favourite areas for building or buying a second home. But places a little nearer home than the Bahamas and Malta with considerably cheaper air fares also have their appeal, if you can manage to get Bank of England permission. Which isn't necessarily that dif-
ficult. Outside the sterling areas, you are allowed one unit per family. There is no official definition of a unit, which has given rise to a number of various deviations.
Prices are not cheap in what are easily the most popular areas in Europe, Spain and Majorca. One company, which has provided 4,500 owners with flats in two years, says that, for example, if the owner uses his holi- day flat for three weeks a year. and lets it for the rest, he can expect to make around 15 per cent return on his investment.
The average price for a two bedroomed, unfurnished flat in Majorca is around £4,800, with prices a little lower on the Costa Blanca and Costa del Sol in Spain. Add to this about £500 for furnishing it. Then, of course, there is the property dollar premium that you have to pay. This fluctuates a lot, but as with most things at present it is quite high now, at 49 per cent. So the minimum cost works out at about £7,000.
The big drawback with trying to let holi- day flats in Spain and Majorca was that the scheduled air fare plus the rent was often more than the plethora of package deal holidays. One enterprising company, Owner Services, has got round this by organ- ising charter flights, full of holiday flat tenants. -I hese flights operate all the year round, and the company is confident that flats are easily [enable in winter.
The price rises, however, almost as much as the distance, if you set your sights on places farther afield, like the Bahamas or Jamaica. So, add the developers hurriedly, does the return on investment. In the Bahamas. for example, the average price of a house without the land is £12.000, and the land ranges from £4,000 for an inland plot to £20,000 on the ocean front. For those who can afford it, though, the return on investment is rewarding-14 per cent is a fair minimum and 22 per cent a decent average.
There is no premium levelled by the Gov- ernment on resort property purchases in .the Bahamas. nor do you have to obtain Bank of England permission to invest there or to pay for land on a time-investment basis. Because the Bahamas are still within the sterling area, pounds can be used for investment in freehold land. And of course. by rater reselling one's holding to an Ameri- can, one gets a dollar value for a sterling asset. On an investment, as well as a holi- day home basis, the Bahamas have certain benefits, such as no tax on real property or on personal property, and no capital gains tax.
Many of the bargain and choice plots in the Bahamas and Jamaica, another de- veloping area out to capture British property investment. have already been taken, and tales of 30-35 per cent tax free return on capital abound. Not so long ago, many companies were persuading people to buy property that they had not seen, at bargain prices. The prices were bargain, because swamp land is not usually expensive.
Now, the reputable companies offer to fly people out free to view the land. But this doesn't mean that an easy way to get a free holiday is to show interest in London, followed by indifference when one arrives in the Bahamas at someone else's expense. It's not as simple as that. The companies charge prospective purchasers f2304250 for a week's stay in the Bahamas. If a transaction takes place. the money is refunded. But if you are going to build a castle in the sun, it is a good idea to make sure the founda- tions aren't in the air.
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